Organisational Structures and IT Projects

  • Contents

    The systems view of project management
    Project management and organisational structures:
    Simple structures
    Pre/post bureaucratic structures
    Functional, Divisional, Matrix, and Project structures
    Network and Virtual structures
    Adhocracy structures

  • The Project Environment & IT projects

    IT Project management must be applied to different project environments

    Project environment
    Systems approach
    Understanding the organisation
    Managing the stakeholders
    Choosing a systems life cycle

    Additional Information

    (1)The concept of project management is not difficult – theories are generally straight forward – but it can be difficult to implement the concepts in different environments.
    The project and the project environment is unique for each project – the project manager must consider this to make sure the project is successful.

    (2) Project environment – idea that projects are temporary/provide a unique product/service/ can’t run project in isolation or it will not meet the needs of the organisation idea of systems thinking (i.e. in the context of the organisation)

  • Systems Approach

    Describes a holistic & analytical approach to solving complex problems using:
    A Systems Philosophy
    Overall model of thinking about ‘things’ as systems
    Systems analysis
    Systems management

    Additional Information

    System - A group of related objects

    A network of procedures
    A complete unit formed of many parts subject to a common plan and serving a common purpose
    A system has to do with order, purpose, inputs, outputs, processes and self-modification
    A system is a collection of things which receive inputs & act deliberately on them to produce outputs to achieve some objective

    Systems usually exist within a broader environment

    Idea of hierarchy and subsystems
    Idea of input-output-process-feedback and resources
    If you want to work on a payroll system, need to understand its part of a larger personnel system, which in turn is part of the business. To work on one part of a system you need to be aware of how it interacts with the rest of the company

    A holistic approach is where the project manager considers how the project relates to the whole organisation and not just one part of it.

  • Systems Analysis

    Problem solving approach
    Define the scope of the system
    Divide into components
    Identify and evaluate problems/opportunities/constraints/requirements
    Examine alternative solutions for improvement

    Additional Information

    Systems analysis is a problem solving approach that requires defining the scope of the system and includes identifying the system boundaries. This involves working with stakeholders to decide what functionality should be included in the system and what is provided by the systems environment. Possible overlaps in functionality with existing systems also needs to be considered. Once the system is scoped it can be divided into components, its problems identified and evaluated, any opportunities considered, and any constraints that need to be met identified. Once this is completed, the systems analyst then examines alternative solutions for improving the current system.

  • Systems Management

    The need to address the 3 spheres of systems management
    Business
    Organisation
    Technology

    It is important to understand that in terms of selecting projects to work on and also how they should be managed, the three spheres of systems management must be considered. This can have a huge impact on selecting and managing projects successfully. For each project the business, organisation and technology issues should be considered.

    3 sphere model for systems management

    3 spheres model

    This diagram shows some of the business, organisational and technological issues that could be factors in an example laptop project for a college.

    Project managers must be aware of the effects of any projects on the interests and needs of the entire system.

    The idea is to always view projects in the context of the larger organisation. Organisational issues are often the most difficult part of working on and managing projects.

  • Understanding Organisations: the 4 frames of organisations

    Structural frame
    Deals with how the organisation is structured (eg organisation chart) –
    should IT be centralised in one department or decentralised across several departments?
    Human Resources frame
    Balance between needs of the organisation and the needs of the people
    Are there shortage of IT skills within organisation? Unrealistic schedules in projects?
    Political frame
    Organisational & personal politics – includes competition for scarce resources
    Symbolic frame
    Symbols and meanings
    Relates to the company’s culture (working hours, dress code)

    Additional Information

    Project managers must learn to work within all 4 organisational structures to function well in organisations.

    HR Frame – eg many projects may be more efficient for the organisation if personnel worked 80 hours or more per week for several months, but this is not realistic for many workers.
    Political Frame – politics in organisations take the form of competition among groups or individuals for power/leadership. Often important decisions need to be made based on the allocation of scarce resources – this can result in conflict – power improves the ability to obtain scarce resources.
    Project managers must pay attention to politics and power if they are to be effective. It is important to know who opposes your project as well as who supports them.
    Symbolic frame – focuses on symbols and meanings. What is most important in any organisation is not what actually happened but what it means. For example, was it a good sign that the CEO came to a kickoff project meeting or was it a threat?
    How do they run meetings? Many IT projects include stakeholders from various cultures. Understanding these cultures is a crucial part of the symbolic frame.

  • Organisational Structures

    Define the way in which a business organises employees, departments, divisions and senior management
    A large organisation might have one or more structures within its various operating units
    A small business usually functions effectively with just one
    Interconnectivity and globalisation have caused business structures to evolve from simple to matrix to virtual organisations connecting employees worldwide

    Additional Information

    An organisational structure defines how activities such as task allocation, coordination and supervision are directed towards the achievement of organizational aims

    The organisational structure of an organisation tells you the character of an organisation and the values it believes in.
    When you do business with an organisation or getting into a new job in an organisation, it is always a good idea to get to know and understand their organisational structure.

  • Simple Structure

    Simple Structure Diagram

    Example: Simple Organisational Structure. The top manager controls the work of the employees not grouped into specific functions.

    Typical of small businesses
    A simple organisation usually has one person in charge, and most decisions run through him/her
    Few formal processes
    Minimal division of labour
    Not suitable for larger businesses

    This works well in an environment with a finite number of decisions. When the operating environment becomes more complex, such as when the business grows, this structure no longer works.

  • Organisational Structures

    The following are the types of organisational structures that can be observed in the modern business organisations

    Bureaucratic Structures
    Bureaucratic structures maintain strict hierarchies when it comes to people management. There are three types of bureaucratic structures:
    Pre-bureaucratic structures
    Bureaucratic structures
    Post-bureaucratic Structures

  • Pre-bureaucratic structure

    This type of organisations lacks standards
    Usually this type of structure can be observed in small scale, start-up companies
    Usually the structure is centralised and there is only one key decision makers

    Additional Information

    The communication is done in one-on-one conversations. This type of structures is quite helpful for small organisations due to the fact that the founder has the full control over all the decisions and operations.

    Pre-bureaucratic (entrepreneurial) structures lack standardisation of tasks. This structure is most common in smaller organisations and is best used to solve simple tasks. The structure is totally centralised. The strategic leader makes all key decisions and most communication is done by one on one conversations. It is particularly useful for new (entrepreneurial) business as it enables the founder to control growth and development.

  • Bureaucratic structure

    These structures have a certain degree of standardisation
    When the organisations grow complex and large, bureaucratic structures are required for management
    These structures are quite suitable for large organisations

    Additional Information

    The bureaucratic structure is found in stable environments with well-defined and routine tasks.
    Bureaucratic structures have a certain degree of standardisation. They are better suited for more complex or larger scale organisations, usually adopting a tall structure.
    Bureaucratic Structures have many levels of management ranging from e.g. senior executives to regional managers, all the way to department store managers. Since there are many levels, decision-making authority has to pass through more layers than flatter organizations. Bureaucratic organization has rigid and tight procedures, policies and constraints.
    These kind of structure is reluctant to adapt or change what they have been doing since the company started. Organisational charts exist for every department, and everyone understands who is in charge and what their responsibilities are for every situation. Decisions are made through an organized process, and a strict command and control structure is present at all times. In bureaucratic structures, the authority is at the top and information is then flowed from top to bottom. This causes for more rules and standards for the company which operational process is watched with close supervision. Some advantages for bureaucratic structures for top-level managers are they have a tremendous control over organisational structure decisions. This works best for managers who have a command and control style of managing. Strategic-decision making is also faster because there are fewer people it has to go through to approve. Some disadvantages in bureaucratic structures are it can discourage creativity and innovation in the organization. This can make it hard for a company to adapt to changing conditions in the marketplace.

  • Post-bureaucratic structure

    The organisations that follow post-bureaucratic structures still inherit the strict hierarchies
    Are open to more modern ideas and methodologies
    Follow techniques such as total quality management (TQM), culture management, etc.

    Additional Information

    Bureaucratic control - the formalisation, codification and enforcement of rules and regulations - does not change in principle.....it shifts focus from organisational structure to the organisation's culture.

    Decisions are based on dialogue and consensus rather than authority and command, the organisation is a network rather than a hierarchy, open at the boundaries (in direct contrast to culture management); there is an emphasis on meta-decision making rules rather than decision making rules. This sort of horizontal decision making by consensus model is often used in housing cooperatives, or community organisations. It is used in order to encourage participation and help to empower people who normally experience oppression in groups.

  • Organisational Structure Types

    Functional Structure
    Divisional Structure
    Matrix Structure
    Team/project based Structure

    Additional Information

    Depending on the organisational values and the nature of the business, organisations tend to adopt one of the following structures for management purposes.
    Although the organisation follows a particular structure, there can be departments and teams following some other organisational structure in exceptional cases.
    Sometimes, some organisations may follow a combination of the following organisational structures as well.

  • Functional

    Functional Organisational Diagram

    Additional Information

    This is the structure most people think of when picturing an organisational chart. Functional: functional managers (engineering, IT, manufacturing, HR) report to the CEO. Their staff have specialised skills in their respective areas. Eg Universities –have a strong functional organisational structure.
    The organisation is divided into segments based on the functions when managing. This allows the organisation to enhance the efficiencies of these functional groups.

    Advantages: Functional structures appear to be successful in large organisation that produces high volumes of products at low costs
    The low cost can be achieved by such companies due to the efficiencies within functional groups.

    Disadvantages: from an organisational perspective if the communication between the functional groups is not effective
    In this case, the organisation may find it difficult to achieve some organisational objectives at the end

  • Divisional Structure

    Divisional Structure Diagram

    Found in organisations with multiple product and service lines, the divisionalised structure groups together multiple departments, divisions and business units under a common administrative and executive umbrella.

    Common administrative functions might include human resources, accounting and investor relations.

    The executive function usually includes top-tier management such as the president, and it might include one or more tiers of vice presidents and general managers.

    These types of organisations divide the functional areas of the organisation to divisions

    Each division is equipped with its own resources in order to function independently

    Divisions can be defined based on the geographical basis, products/services basis, or any other measurement

  • Matrix Structure

    Matrix Structure Diagram

    The matrix structure represents the middle ground between functional and project structures. Personnel often report to both a functional manager and one or more project managers. For example, IT personnel at many companies may split their time between two or more projects, but they report to their manager in the IT department.

    Project managers in a matrix organisation have staff from various functional areas working on their projects. Matrix organisations can be strong, weak or balanced based on the control exerted by the project managers. Specialists from different areas of the company assemble to work on one project, usually for one client, and then return to their respective functional units.

    The matrix structure combines the specialization provided by a functional structure and the focus provided by a divisional structure. Employees would be part of teams that connect functional roles with divisional roles. Each employee belongs to at least two formal groups; one is a functional group, and the other is a project, product or program team. Your employees also report to two bosses -- a functional group boss and a team boss. The structure increases your employee motivation and allows training across functional areas.

    When it comes to matrix structure, the organisation places the employees based on the function and the product
    The matrix structure gives the best of the both worlds of functional and divisional structures.

    In this type of an organisation, the company uses teams to complete tasks
    The teams are formed based on
    the functions they belong to (eg: software engineers)
    and product they are involved in (eg: Project A)

  • Functional, Project, and Matrix Organisational Structures

    Diagram of Functional, Project and Matrix structures
    Information Technology Project Management, Fifth Edition, Schwalbe Copyright 2007

    Additional Information

    Comparison of the three basic organisation structures:
    Functional: functional managers report to the CEO
    Project: program managers report to the CEO
    Matrix: middle ground between functional and project structures; personnel often report to two or more bosses; structure can be weak, balanced, or strong matrix

  • Team/Project Based Structure

    Team structures organise each function into an objective-based group
    Members from each department work together to solve problems and find opportunities
    Employees might be involved with product development teams or a diversity task force
    The team structure can help remove barriers between departments and foster effective problem-solving relationships
    It can also motivate employees and increase decision-making times

    Additional Information

    It has a hierarchical structure but instead of functional mangers or vice presidents reporting to the CEO, program managers report to the CEO. Their staff have a variety of skills needed to complete the projects within their programs. An organisation that uses this structure earns their revenue primarily from performing projects for other groups under contract. Many defence, architectural, engineering and consulting companies use this type of structure. These companies often hire people specifically to work on particular projects.

  • Other Structures

    Network structure
    Links together multiple organisations working on complex projects
    Virtual structures
    Links geographically spread units of a global organisation

    Additional Information

    Other structures include network and virtual structures. A network structure links together multiple organizations to work on one or more complex projects. A joint venture between two or more companies bidding on a large military procurement system would be an example of a network structure. A virtual structure holds together far-flung operating units of global organisations. Managers and employees often work in different time zones, and the entire reporting-and-control mechanism might be through Internet-based tools such as instant messaging, web-based training and virtual meeting rooms.

    In a network structure, your organisation would rely on other organizations to perform important roles. For instance, you may employee an accountant, website administrator or security personnel on a contractual basis. You reduce the overhead cost of your company's operations because you don't need to hire as many staff members. But you also lack control in the outcome because you rely on contractual workers to complete critical work.

    Virtual organisation is defined as being closely coupled upstream with its suppliers and downstream with its customers such that where one begins and the other ends means little to those who manage the business processes within the entire organisation. A special form of boundary less organisation is virtual. It is enabled by software to exist. The virtual organisation exists within a network of alliances, using the Internet. This means while the core of the organisation can be small but still the company can operate globally be a market leader in its niche. According to Anderson, because of the unlimited shelf space of the Web, the cost of reaching niche goods is falling dramatically. Although none sell in huge numbers, there are so many niche products that collectively they make a significant profit, and that is what made highly innovative Amazon.com so successful.

  • Adhocracy

    Derived from "ad hoc," an adhocracy structure is the opposite of a bureaucracy
    It's found in technology and other rapidly growing companies where flexibility and adaptability are keys to survival
    There are few routine tasks because of the rapidly changing operating environment. There is no time, and often no need, for formal processes and reporting structures.

    Additional Information

    Adhocracy is an organisational design whose structure is highly flexible, loosely coupled, and amenable to frequent change. Adhocracy arises out of the need of formal organisations to be able to recognise, understand, and solve problems in highly complex and turbulent environments.

    As a design, adhocracy is malleable and relatively non-hierarchical, rendering it suitable for addressing complex and ill-structured problems in its environment. Adhocracy’s purpose is to address specific, often urgent problems that other organisational types have failed to solve. Decisions can be made by technical experts and the work units are flexible. Adhocracy tolerates and sometimes even promotes ongoing changes in its subunits. Consequently, authority is accorded relatively less status in the adhocracy than in other formal organisations.

    This type of structure often applies to start ups (young firms facing fierce competition), and can be found in examples such as crowd surfing platforms.

    Another example is Google’s practice of allowing employees to spend a portion of their time on any innovative projects they choose.

  • Conclusion – Organisational types

    Every organisation needs a structure in order to operate systematically
    The organisational structures can be used by any organisation if the structure fits into the nature and the maturity of the organisation.

    In most cases, organisations evolve through structures when they progress through and enhance their processes and manpower. One company may start as a pre-bureaucratic company and may evolve up to a matrix organisation